Italy tightrope – Terra Argentina

ia, in the floja– string

Buenos Aires, July 9 (Special for NA, Nicolas Tereschuk) – What was an open secret, is now in the front pages of specialized media: the fourth European economy, Italy, is officially on the tightrope.

Illustration of a painted with the colors of the tricolor bus, the words “bank” and with its rear wheels sticking out of a cliff on the cover of The Economist worth a thousand words.

The magazine noted that Italy is at its greatest economic weakness in years, with its public debt playing 135 percent of its gross domestic product and its rate of adult employment in lower levels of all the old continent except Greece, of course-.

The publication noted that the situation of Italian banks is very weak and that the actions of these companies fell by half of its value since April, in a move that intensified after the Brexit.

The world’s oldest bank, Monte dei Paschi di Siena, is the most complicated of a long list of entities in trouble, forcing the head of the Italian central bank, Ignazio Visco out state that is willing to “state intervention” in the financial system.

As reported in Bloomberg, Italy is in talks with the European Commission to recapitalize banks with assets more at risk.

But negotiations are locked around whether recipients of the aid will face losses.

The newspaper The Wall Street Journal estimated that a comprehensive plan for Italian banks would require about 40 billion euros.

But the rules imposed by the European Union for this type of extraordinary aid became more restrictive in 2014, after the new shocks in the continental financial system.

“We can not be changing the rules every two years,” he said in his unmistakable tone, the most powerful woman on Earth, Germany’s Angela Merkel, to the Italian situation.

Late last year past, the prime minister, Matteo Renzi decided to rescue four banks 4 billion euros, but the measure was in a scandalous context, after a retired outside Rome committed suicide after investments of 100 thousand euros have evaporated in the Banking Eturia entity.

The retiree was one of the 130 thousand shareholders and bondholders of Italian banks that were affected.

The dilemma facing Renzi is now clear: if not advance with European help to save the banks, all the local financial system could be at risk.

But to receive the extraordinary loan should make bank shareholders “foot” face losses, which could generate a huge political unrest.

The policy puts the tail everywhere: in Germany there are elections next year and to show Merkel “soft” with the Italians would not be a good deal in terms of votes.

On the other hand if Renzi falls, Italian politics could be left critics of Euro looming on all sides of the continent.

In short, the situation is not surprising: it is one more episode in a world that fails to find a lane stability after the financial crisis of 2008 and its many aftershocks.